Melbourne

Will centralisation save the CBD?

2013-09-23T05:00:00Z

Melbourne CBD's outer perimeter becoming a major draw card for City Fringe tenants

MELBOURNE, 23 SEPTEMBER 2013 – To be located in Melbourne’s CBD is non-negotiable for a number of tenants, however strong incentives, good quality fitouts, backup power and amenity are driving those previously opting to be based in the City Fringe to inch closer to the edges of the city.

The CBD always has attracted firms due to its central location; however prices have often prohibited tenants from signing leases in CBD office buildings. While premises in the heart of the CBD typically dominate enquiry, Jones Lang LaSalle is seeing more city fringe tenants opt for office accommodation on the outer perimeter.

Director of VIC Office Leasing, Ashley Buller said, “CBD incentives are at strong levels enabling fringe tenants to secure fitted tenancies in the CBD, which have previously been out of reach.”

“In addition to strong incentives, CBD buildings have greater infrastructure than those in the suburbs and we have seen two tenants recently relocate from the City Fringe to take up space in 55 Collins Street, at the East-end of the CBD,” Mr Buller said.

“IG, a leading global CFD and Forex provider, were previously located on St Kilda Road and have recently signed a 7 year lease in the building. IG has large back-up requirements which CBD properties can cater for due to the 24-7 nature of the market.”

Director of IG Australia, Oliver Imre said, “While back up power and infrastructure were the original draw cards, the fantastic amenity and transport services that the CBD offers made relocating our business to the CBD the preferred option.”

A large proportion of the younger workforce lives within close proximity to the CBD and this demographic typically want to work in the city as opposed to the outer suburbs. As a result, typical suburban tenants are relocating to the CBD as employers seek to win and retain young staff.

“Businesses are able to attract a bigger talent pool if they are based in the CBD,” Mr Buller said.

In an example of this, one of Australia’s largest transportation consultancies, GTA Consultants (originally located at High Street, Kew) has taken on 1,000sqm of fitted space on a 5 year term at 55 Collins Street.

Managing Director of GTA, Michael Durkin noted, “Staff retention and attraction is a priority for our company, therefore a move to a more central location was not only imperative but also allows us to provide better service to our state government and private clients and partners who are primarily based in the CBD.”

According to the Victorian Government, around 5.6 million people live in Victoria with more than 70% living in Melbourne. Relative to this the City of Melbourne has a population of approximately 93,600 (Census 2011, ABS) which covers 37.6sq km.

Those who live close to the city are increasingly commuting via bicycle or walking to work, which influences office accommodation decisions.

Mr Buller said, “One of the challenges employers face is attracting and retaining quality staff, which in turn is setting the expectation to seek quality buildings with services not only in a central location, but supporting employee health and recreation activities.”

“CBD Landlords are catering for this demand by providing exclusive access to high quality showers, ventilated lockers, air compressors in bicycle storage areas and offering towel services for a small charge per month,” Mr Buller said.